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General Landlording & Rental Properties

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Will F.
  • Investor
  • Los Angeles County, CA
275
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958
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Capital Improvements vs Repair Expense

Will F.
  • Investor
  • Los Angeles County, CA
Posted Apr 12 2018, 07:10

Cap Imp vs Repair Expense IRS

I'm in the middle of doing some 2017 tax crunching last minute so of course I am on Bigger Pockets forum instead of finishing up my taxes :-)

Anyways here's a useful tip on Cap Improvement vs Repair Expenses

My strategy has always been to increase regular maintenance, repairs (Repair Costs) and spread out costs over time instead of the hands off approach to defer maintenance into larger Capital Improvement expenses.

  Thus you can take advantage of writing off 100% of expenses instead of larger improvements ($20 k roofs on apartments) etc.  If you maintain the roof over time for instance you write that off in that year instead of having to depreciate the cap expense over so many years (ie 15 year roof or 20 year roof)

It's almost always better to load your Repair and Maintenance expenses and do less Cap Improvements.  Which you later have to pay a tax on if you do decide to sell (and not 1031 exchange but that's another story)

http://www.dbbllc.com/newsletters/focus/mar2012/ir...